Aston Martin issues warning over Brexit

Company's finance chief says production may halt temporarily if the UK government fails to reach a Brexit deal with the EU

The high-end car company Aston Martin, deemed the UK’s coolest brand, which manufactures all its cars on British soil with an estimated 1000-strong work force, has warned of disaster should Theresa May take the country out of the European Union without a trade deal.

Mark Wilson, Aston Martin’s finance chief, cautioned the Commons Business, Energy and Industrial Strategy Committee on Tuesday of a ‘semi-catastrophic effect of having to stop production’ should the Government fail to reach a UK-EU deal.

All new cars must have VCA (Vehicle Certification Agency) approval in the UK, which is valid in the EU. However, without a valid deal between Governments, that validity would cease for new cars from March 2019. Car makers are lawfully obliged to halt production, even if temporarily, when applying for a new certification as they cannot hold approval from any more than one authority simultaneously.

‘For Aston Martin, it’s simpler than for larger international players. We’re a British company. We produce our cars exclusively in Britain and will continue to do so,’ Mr Wilson said.

‘Without VCA type approval, it really is a stark picture for us. We need to make sure that type approval carries over, has validity and recognition, and has the equivalence it has today.’

‘Otherwise, there are significant costs involved in gaining another type arrival, but also the semi-catastrophic effect of having to stop production, because we only produce cars in the UK.’

‘Re-certifying to a new type of approval, be that federal US, Chinese or even retrospectively applying to use the EU approval, would mean us stopping our production.'

Mr Wilson also added: ‘We suppose there will be a transitional arrangement. During that transition we would have to look to see how Aston Martin could re-certify under a non-VCA approval structure.’

Giving evidence to the Business Select Committee alongside Mike Hawes, chief executive of the Society for Motor Manufacturers and Traders and Patrick Keating, government affairs manager for Honda Motors Europe, all three called for clarity on transition deals with the EU.

Mr Keating told Members of Parliament that Honda would need 18 months to prepare its systems for new customs procedures for exporting to Europe. He explained how, through their JIT (Just In Time) stock management system, Honda imported two million components every 24 hours from the continent through 350 separate truck deliveries, keeping only 60 minutes’ worth of stock on their shelves. For every 15-minute delay at customs, the company would lose £850,000 a year. With a plan to increase the amount of stock warehousing should Brexit cause friction at the border, Mr Keating indicated that they would need clarity by March 2018 at the latest.

Besides making it harder to benefit from any free trade agreement with non-EU countries after Brexit (free trade agreements require 60% of goods to originate from the country making the agreement), Mike Hawes highlighted that a lack of EU deal could add an extra £1800 onto retail prices in showrooms.

Almost 80% of the cars built in Britain are exported, with just under half being sent to the EU. Around 70% of all the new cars on UK roads are also imported from EU countries, according to the Society of Motor Manufacturers and Traders.